Q3 2020 Vistage CEO Confidence Index: Confidence Rebounds

Signs of life in the economy and an increase of business activity has led to an increase in confidence of small and midsize business CEOs. The Vistage CEO Confidence Index rebounded to 82.8 Q3 2020; while not at peak recovery, this is just 2.6% below Q3 2019.

While all factors that comprise the Index improved from last quarter, the biggest driver of the rebound is decreasing pessimism about the future U.S. economy. September’s survey found that 83% of CEOs expect the economy to worsen in the year ahead, a 10-point improvement from 93% last quarter.

The other factors that contributed to the rebound from last quarter include:

  • 32.5% improvements in revenue expectations
  • 29.2% improvement in profitability expectations
  • 28.3% increase in investment plans, largely driven by a significant decline in contraction
  • 25.4% improvement in workforce plans
  • 10.1% improvement in expectations for the U.S. economy

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About the Vistage CEO Confidence Index

Q2 2020 Vistage survey: CEO confidence plummets in pandemic-induced recession

While the full impact of the economic shutdown occurred in April and May, the latest Vistage CEO Confidence Index data still reveals the devastating effects of the pandemic on small and midsize businesses (SMBs). The Vistage CEO Confidence Index plummeted to 65.5 in Q2 2020; there have only been two other times in the history of the survey that the Index was recorded so low.

While every factor that comprises the Index dropped from last quarter, not surprisingly, overwhelmingly the biggest decline was CEO sentiment about current economic conditions in the U.S: 93% of CEOs report that the economy recently worsened. In comparison, just 25% believe that the economy will continue to worsen in the next 12 months which is an indicator that CEOs feel the economic impact has reached the bottom.

As a result of the shutdown, 80% of SMBs reported some level of revenue declines; 17% report declines of 10% or less. Revenue projections are the lowest they have been since the Great Recession; 31% of CEOs expect decreased revenues in the year ahead. However, there is some optimism as 45% expect increased revenues in the year ahead. Looking at monthly data collected from CEOs about expectations for revenues and profits for the year ahead, it is clear that the bottom was reached April, which is not reflected in the quarterly data.

Through the pandemic, 58% of CEOs maintained (47%) or grew (11%) their workforces. Looking ahead, 36% plan to increase their workforces in the next 12 months. The Paycheck Protection Program (PPP) had a part in these plans. Four-in-five CEOs surveyed were funded by the PPP, and of those, 90% expect most (35%) or all (55%) of the loan to be forgiven.

Download the Q2 2020 Vistage CEO Confidence Index report to learn more about the sentiment of small and midsize business leaders, including:

  • Projections about the performance of the U.S. economy
  • Revenue and profitability expectations
  • Expansion plans for hiring and investments
  • Coronavirus impacts

Q1 2020 Vistage CEO Confidence Index

Rather than sharing the report itself this quarter, I thought it would be more useful to share Joe Galvin, Vistage Chief Research Officer, interpretation and perspective as follows.

There will not be a “new normal” on the other side of the COVID-19 crisis. When business activity picks up and the world begins to spin again, people and businesses will engage in a “new reality” that will not resemble what we knew to be normal. We will individually and organizationally engage in new norms defined by fundamentally different societal changes and business dynamics that emerged in the pandemic.

At some date in the not too distant future, there will be a total business reboot — CEOs will be resetting their business in terms of employees, customers and financials — to a new, post COVID-19 level. From that starting point, we will begin to rebuild and grow through the recovery into this new reality.

The transition begins when the current quarantine level of essential services expands to include certain segments of businesses that had been considered non-essential — this will trigger a return to work for many.

The transition will also accelerate as we increase testing, analyze more data and develop better knowledge about the virus. We can expect that manufacturing, construction, business and personal services will reboot first, while bars, restaurants, entertainment and hospitality businesses will reboot later.

Of course, it’s difficult to know exactly when the reboot will happen and when the recovery will begin in earnest. Our April survey of CEOs provides valuable insights into how leaders in our community are feeling about the economy and the state of business.

What CEOs think: April 2020 survey results

In the Vistage CEO Confidence Index survey conducted April 1 – 8, 11% of CEOs from small and midsize businesses felt that economic conditions would begin to improve in one to two months. An additional 41% thought the economy would improve in three to five months, and another 37% reported it would take six to 12 months.

According to this data, business activity is likely to follow a predictable trajectory: People will return to work in new segments of non-essential businesses, which will ignite the businesses that support them. Once these businesses are in full swing, customers will be encouraged to spend more, resulting in more business activity and the growth of more businesses.

The split in CEO opinions regarding when the economy will improve suggests an economic restart — on local, regional, national and global levels — is still uncertain and will likely take time.

Looking further ahead

When asked about the state of their businesses in six months, 21% of CEOs felt their businesses would be “stronger than before” and 16% expect it would be “back to normal.” Nearly half (49%) expect their businesses will be “moderately weakened but gaining momentum,” while 14% expect it to be “significantly weakened.”

Should a second wave of the virus hit, these outlooks are likely to worsen dramatically. Much depends on the timing and availability of a vaccine or the realization of herd immunity.

15 years of behavior change in 30 days

The most challenging aspect of any business transformation initiative is human behavior.

Whether it’s the introduction of a new technology initiative or a major shift in culture, transformation is always dragged down by humans’ reluctance to change. Often, this reluctance comes from fears of the unknown or losses in job status.

What’s remarkable is how much the COVID-19 crisis has reduced that resistance. Over 30 days, we saw 15 years’ worth of human behavior change.

This is true in both in personal and professional contexts. Our acceptance and use of technology for digital collaboration, entertainment streaming and the acquisition of food has accelerated as quickly as our individual technology skills have improved. Our acceptance of doing things differently — because we have to — has accelerated our adoption of technology. Technology has allowed much of our lives and businesses to continue in ways that would not have been possible years ago.

Consider these transformations:

Work from home: The genie is out of the bottle on working from home. According to our April survey, 91.8% of CEOs have implemented some form of work-from-home solution during the crisis.

Advances in collaboration applications such as Slack, Zoom, and GoToMeeting, combined with the astonishing performance of internet infrastructure, have made distributed workforces possible. The forced march to digital collaboration has broken down both generational and emotional barriers to this work style. Work from home was already high on the list of preferences for the emerging workforce. It will now become part of everyday life for knowledge workers.

Tele-everything: Practicing social distancing has accelerated tele-capabilities in healthcare, education, business, and more.

  • Tele-medicine has enabled doctors to care for a large number of patients, digitally. While not eliminating in-person care, tele-medicine offers a more efficient alternative to traditional medical care.
  • Online education has kept students learning and connected to their colleges, universities, and schools while physical buildings remain closed. Many professors and students have already adapted well to digital classrooms.
  • Food delivery has ramped up. Beyond ordering takeout, people are placing orders with farms, grocery stores, and local restaurants more than ever before.
  • Tele-business will replace the need for physical office spaces. Combined with the work-from-home reality, office workspace requirements will change.

Business travel may never return to prior levels. As businesspeople have learned to connect and communicate digitally, they have also realized that digital communications are just as effective as face-to-face relationships when blended with occasional human contact. Businesses may reconsider how often they schedule face-to-face meetings and may choose to leverage technology for more customer interactions.

No-Touch Transactions: ATMs, airline check-in terminals, and other ‘touch” interfaces will be replaced by a purely digital experience. Apple Pay, QR codes, and Bluetooth will eventually eliminate the need to touch anything minimizing potential exposure. Cash will become obsolete in advanced economies. Credit cards will be replaced and physical tickets of every type will be done digitally, all managed from a “smarter” phone.

Digital transformation: The rapid adoption and utilization of technology will energize digital transformation efforts. As businesses begin to reboot, rebuild and recover, initiatives to digitally transform how business is done will further accelerate, driven by employees’ behavioral changes and newfound flexibility. Lessons learned in the crisis will form the foundation for business change. In turn, this will fuel demand for the 5G network and digital infrastructure to satisfy our ever-greater thirst for bandwidth.

Unanswered questions: The COVID-19 crisis is raising other questions about how business and society may change in the months and years to come.

  • Will our collective thinking about healthcare change like our feelings about security did after 9/11?
  • Will we think differently about renewable energy after the collapse of the oil market and seeing the skies clear over Los Angeles, Shanghai, and Mumbai?
  • After we thank essential workers for keeping us functioning and alive, will we rethink the minimum wage and how we help those most at need in our community?
  • Will we think differently about globalization when supply chains and critical components reside outside any country’s influence — and will we think it’s worth the cost to “build our own”?
  • What will we think about paying for the cost of stimulus packages on top of an already massive debt?

It only took 30 days to go from what was normal to our current “state of wait.” We continue to look for signs that we can begin rebooting our economy, rebuilding our businesses, and start the climb to a new reality. We will know we’ve arrived when we all feel comfortable going to a sports event, concert, restaurant, theater, or other large social gatherings.

Until that point, be prepared to rethink, reimagine, and relearn everything about the business you knew before the coronavirus — and focus on preparing your business to be one that thrives in the new reality.

Q4 2019 Vistage CEO Confidence Index

Optimism Recovers MidYear Losses

Confidence among CEOs in the Q4 2019 survey regained the losses in the prior two quarters to end the year at the same favorable level as at the beginning of 2019. The Vistage CEO Confidence Index was 91.5 in Q4 2019, up 7.7% from the prior quarter and nearly equal to the first quarter’s 91.6. The Index is still below the 95.4 recorded in Q4 2018, and the recent peak of 110.3 at the close of 2017. The steep declines occurred from year-end 2017 to year-end 2018, and the Index reached its recent low in Q3 2019. While this rebound is small, it points toward the expectation that the expansion will continue during 2020, even if at a slower pace.

The anticipation of slower economic growth has continued to temper revenue and profit expectations as well as planned expansions in fixed investments and employment. Those declines were marginal this year, and the latest data regained a good bit of the mid-year losses.

Trends in the Vistage CEO Confidence Index show a close correspondence with year-to-year changes in real GDP published by the U. S. Bureau of Economic Analysis. This correspondence shows that the expectations of firms indicate a small rebound in the pace of economic growth in early 2020. For the full report click here.

— Analysis provided by Dr. Richard Curtin, University of Michigan

Q2 2019 Vistage-Chicago Confidence Index – Chicago More Pessimistic

Chicago Area Survey Highlights are below. Click here for more detail by industry and for a comparison to 2018.

17%of CEOs thought the national economy had improved in the past year (vs. 31% nationally)
10% of CEOs expect the economy to improve in the year ahead (vs. 13% nationally)
53% of CEOs expect to increase revenue in the year ahead (vs. 64% nationally)
45% of CEOs expect rising profits in the year ahead (vs. 54% nationally)
31% of CEOs expect to increase investments in the year ahead (vs. 40% nationally)
40%of CEOs plan to expand their workforce in the next year (vs. 56% nationally)

© 2019 Vistage Worldwide, Inc.

Elisa K Spain http://elisaspain.com/leadershipcoach/

Are You a CEO or President of a Privately Held Business? If you are also a lifetime learner and want to learn more about my Vistage Group, click http://elisaspain.com/impact/

Q1 2018 Confidence Index: CEO Confidence Index Slips in 2018

The Q1 Vistage CEO Confidence Index – The confidence of CEOs from small and midsize businesses (SMBs) has slipped in the past quarter but remains high, according to new data from Vistage.

The Vistage CEO Confidence Index measured 105.8 in Q1 2018. By comparison, the index was 110.3 last quarter (Q4 2017) and 106.8 one year ago (Q1 2017). The Q1 2018 survey had 1,712 respondents.

To calculate the index, researchers account for factors including CEO opinions on current economic conditions, expected economic conditions, expected changes in employment, planned fixed investments, expected revenue growth and expected profit growth. The index has a strong track record of predicting GDP growth.

In his analysis of the results, Dr. Richard Curtin of the University of Michigan expressed a positive outlook. “Although the Vistage CEO Confidence Index retreated from the decade high recorded at year-end 2017, it still remains quite favorable,” he said. “The decline in confidence was mainly due to a moderation in the pace of growth expected for the national economy during the year ahead.”


Q1 2018 Vistage CEO Confidence Index highlights include:

  • 62% of CEOs said the economy had recently improved, a decline from last quarter’s 66%.
  • 35% of CEOs expected the economy to post additional gains during the year ahead, down 10 points from 45% last quarter.
  • 64% of CEOs planned to expand their workforce in the year ahead.
  • 79% of CEOs expected increased revenues in the year ahead.
  • 66% of CEOs expected increased profits in the year ahead.
  • 54% of CEOs expect to increase investment expenditures in the next year.

Why Vistage Works

Elisa K. Spain

Vistage CEO Confidence Index: Hiring Is A Top Concern in Q2 2014

Vistage CEO Confidence Index: Hiring Is A Top Concern in Q2 2014

q2 2014

The quarterly Vistage Confidence Index is now available.

The latest Vistage survey found that CEOs continued to feel confident about today’s economy, as the Vistage CEO Confidence Index was virtually unchanged from the levels recorded in the prior two quarters. The Vistage CEO Confidence Index was 101.0 in the 2nd quarter 2014 survey, nearly identical with the 101.3 in the 1st quarter and the 101.5 in the 4th quarter of 2013. This was the best three-quarter performance since 2005. The constancy of economic optimism is all the more surprising given the drop in GDP during the 1st quarter, indicating that CEOs discounted last quarter’s decline as an aberration due to the harsh winter.

Below are some key highlights from the Q2 2014 Vistage CEO Confidence Index (all members surveyed):

  • 73% of CEOs expect increased revenues over the next 12 months.
  • 57% of CEOs planned on expanding their payrolls, just below last quarter’s 58%, which was the highest level since the start of 2007.
  • 30% of CEOs report that hiring new staff is the top business issue that they now face.
  • 46% of CEOs plan increases in investments in new plant and equipment.

Elisa K. Spain